Altcoins are rallying, significantly outperforming Bitcoin in recent trading sessions. However, given the current market uncertainty, a sustained upward trend is not guaranteed.
Meanwhile, analysts at CryptoQuant view the surge of interest in altcoins coinciding with a correction in Bitcoin's price as a concerning signal. Is this assessment valid? Quite likely. Notably, a similar pattern emerged in late 2024, which triggered a 30% collapse in altcoin values. That downturn was followed by an extended corrective phase. Could history repeat itself now?
Regterschot, an analyst at CryptoQuant, states that investors who fail to take profits in time are now experiencing losses. Moreover, caution is warranted when capital flows between assets lack sustained liquidity support.
In his view, the market is displaying signs of overheating, where participants are compensating for waning interest in Bitcoin by shifting excessive attention toward high-risk assets. This trend could precipitate a sharp decline in quotes if macroeconomic conditions deteriorate even slightly. A significant worsening would amplify the sell-off, prompting turmoil, noise, and disorder across the market.
The current volatility is further exacerbated by the absence of clear fundamental growth drivers for most altcoins. The CryptoQuant analyst concluded that under such conditions, retail investors were the most vulnerable, as many are driven by emotional decision-making.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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